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Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

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Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#191

Post by hnburnsy »

mixdup wrote: post #79
hn_throwaway_99 wrote: post #40

Yellen and the FDIC is in a tough spot. This is the important line, "Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law." Thus, on one hand, I'm glad they're doing this, as it should help prevent wider bank runs, and it ensures that banks are the ones that are actually paying for it. At the same time, this is yet another exam…

Well, paying for it by a special assessment on banks means the banks aren't going to get a free ride. They, as a group, have to get their shit together otherwise they will pay dearly

Banks won't pay employees (lower salaries or lower increases), shareholders (lower share price or dividends) and/or customers (higher fees or less interest) will.

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#192

Post by ummonk »

MuffinFlavored wrote: post #115
zamfi wrote: post #42

Wow, here’s the real news: > Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law. Note the uninsured depositors clause in there — FDIC &co seem to have acted unilaterally to extend deposit insurance beyond the 250k and to the full amounts of any deposit account. And they are charging the banks for it. If this doesn’t stop a ru…

> Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. how do you interpret this part? what is an example of somebody who would be an unsecured debtholder? as in somebody with a stake in SVB the buisness? https://finance.yahoo.com/quote/SIVB/

Yeah it's an investor who invested in a debt instrument offered by the bank. So CD holders will be made whole but holders of any corporate bonds won't.

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#193

Post by patientplatypus »

hn_throwaway_99 wrote: post #40

Yellen and the FDIC is in a tough spot. This is the important line, "Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law." Thus, on one hand, I'm glad they're doing this, as it should help prevent wider bank runs, and it ensures that banks are the ones that are actually paying for it. At the same time, this is yet another exam…

I was reading this and came across "No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer."

What does this "special assessment on banks" mean in practice? Do they just go to all the bulge bracket banks and demand that they buy the outdated Treasuries at a loss? How does this work?

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#194

Post by JamisonM »

hn_throwaway_99 wrote: post #40

Yellen and the FDIC is in a tough spot. This is the important line, "Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law." Thus, on one hand, I'm glad they're doing this, as it should help prevent wider bank runs, and it ensures that banks are the ones that are actually paying for it. At the same time, this is yet another exam…

THEY ARE NOT IN A TOUGH SPOT!!!!

They know (and it is obvious) that all deposits are going to be fine without any extra funds, wacko VC's and nutjob politicians are stoking the sort of flames that might cause a contagion so they are forced to make statements like this.

The fact that the statement is so milquetoast is certainly on them, but being uber-conservative in your promises is generally a failing/asset for bank regulators.

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#195

Post by dehrmann »

Khaine wrote: post #99

So much for moral hazard. Capitalism is supposed to be about profit and loss, you bail out the losers, there is no end to the loss. I guess we still haven't learned the lessons from 2008. Effective regulation should have been put in place to oversee that banks are effectively managing their risks. Not bailing out companies whenever times get tough.

> you bail out the losers, there is no end to the loss

The difference here is that the "losers" made was supposed to be an incredibly safe bet. The people who made the actual bad bets are all losing their jobs. Shareholders are getting nothing (ish). It's the customer who's getting protected, here.

> I guess we still haven't learned the lessons from 2008

Not my observation, but it's more like we were fighting the last crisis. Stress tests were focused more on bad assets, not safe assets in an environment with rapidly raising rates. Regulation and oversight only work for failure modes you're looking for. A handful of short sellers spotted this earlier in the year, but what happened is only obvious in hindsight.

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#196

Post by bombcar »

spdustin wrote: post #114

The “special assessment” is levied directly on banks, and is referenced in 12 U.S.C. 1817(b)(5): In addition to the other assessments imposed on insured depository institutions under this subsection, the Corporation may impose 1 or more special assessments on insured depository institutions in an amount determined by the Corporation if the amount of any such assessment is necessary (A) to provide sufficient assessmen…

I love how © makes a and b pointless.

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#197

Post by notfromhere »

toughlover917 wrote: post #148
beebmam wrote: post #93

Earlier quoted context omitted.

How do you square this statement of yours: > Yellen has just broadcast that FDIC insurance is essentially unlimited, as long as you can threaten wider disruption to the economy. with this quote from the Treasury Dept statement? > "No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer."

EXACTLY! This will be born by the taxpayer. What were all the VCs f*cking thinking concentrating all their portfolio companies in one financial institution? This was terrible decision making on their part (and by the portfolio companies). Why does this all of a sudden become a taxpayer liability? Because All-In bros got on Twitter and started spamming people?

FDIC gets its money by a fee charged to banks. Tax money isn’t going into this

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#199

Post by notfromhere »

lambic2 wrote: post #185
version_five wrote: post #112

So they made their decision, everyone can move on. I just hope nobody forgets how prominent VCs behaved during the brief period of uncertainty. The idea of some noble class of investors championing disruption is dead. They're just a bunch of rent seekers like everybody else. For some silly reason I had some respect for the startup industry before this, now I see it as a joke. It's great at a personal level that "foun…

I don't understand this comment. 1) SVB was not managed by VC's. 2) SVB went under because they bought US Treasuries, not because they took risky bets on startups.

VCs started a bank run by telling all their portfolio companies to pull out

Re: Joint statement by the Department of the Treasury, Federal Reserve, and FDIC

#200

Post by mixdup »

hnburnsy wrote: post #191
mixdup wrote: post #79

Earlier quoted context omitted.

Well, paying for it by a special assessment on banks means the banks aren't going to get a free ride. They, as a group, have to get their shit together otherwise they will pay dearly

Banks won't pay employees (lower salaries or lower increases), shareholders (lower share price or dividends) and/or customers (higher fees or less interest) will.

the economics of the market still prevail. if they lower salaries, people will find jobs elsewhere. if they overcharge for their services, customers will go elsewhere (and there are alternatives--credit unions)

yes, consumers pay all of the taxes and fees that are charged to companies but it does not change the supply/demand equation in the open market for the services the banks offer. the price elasticity of the things you mention is not affected by a new tax on banks

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